Wealth management

Hillhouse Capital raises record US$10.6 billion for private equity fund focused on Asia tech and health care

PUBLISHED : Wednesday, 19 September, 2018, 1:06pm
UPDATED : Wednesday, 19 September, 2018, 11:03pm

Hillhouse Capital, known for its investments in Tencent Holdings, Baidu, Didi Chuxing and Meituan Dianping, has raised a record US$10.6 billion for its latest private equity fund that will focus on Asian technology, health care and consumer sectors, the Beijing-based firm said on Wednesday.

Hillhouse Capital Fund IV is likely to have beaten KKR’s record of US$9.3 billion to become the largest pool of private equity capital ever raised with a focus on the Asia-Pacific region, according to figures from data provider PitchBook.

Just like what Hillhouse did with its previous buyout of shoe retailer Belle International, “the fund will [also] maintain focus on using Hillhouse’s expertise in technology to transform traditional businesses”, the investment management firm said in a statement.

Lei Zhang, founder and CEO of Hillhouse Capital, said that they will continue working with businesses and management teams to “deploy technology-driven solutions”.

Founded in 2005 with US$20 million from Yale University’s endowment, Hillhouse currently has more than US$50 billion under management, according to the latest information from the company.

Hillhouse manages assets for institutional LPs (limited partners) such as Canada Pension Plan Investment Board, San Francisco Employees’ Retirement System, Yale University and Mayo Clinic, according to data from PEI.com.

Zhang, a Yale graduate, has built his reputation by making early investments in Tencent and JD.com.

The firm has also invested in a number of high-profile Chinese technology start-ups, such as ride-hailing company Didi, electric car maker Nio, and online on-demand services platform Meituan.

In 2017, Hillhouse led a HK$53.1 billion (US$6.8 billion) deal to privatise Hong Kong-listed Belle International, the city’s largest privatisation deal of the year. It made Hillhouse the controlling shareholder with a 57.6 per cent stake.

Zhang said last year the deal was mainly aimed at revamping the shoe retailer, which had struggled to compete with its online rivals, and integrating traditional and digital retail models.

Hillhouse had provided technology talent and other resources to aid the process, including improving its inventory, exploring e-commerce sales channels, and turning shop assistants into fashion advisers.

On Wednesday, a joint survey by Mergermarket and Dechert said although the global private equity market still remains buoyant, private equity firms are facing unprecedented pressure to find long-term value, as uncertainties rise about disruptions in global trade, repercussions from the US tax code and regulatory overhaul, and a deleveraging environment.

Competition for deals has also increased.

The majority of the 100 senior executives surveyed expect growing competition that will lead to a wave of consolidation among private equity firms over the next few years.